There’s Literally No Money in a Google Snippet/Link Tax

For nearly a decade now news publishers have stared greedily at Google's growing profits from its search engine and demanded that they be paid for their articles showing up in the search results.

This demand was ridiculous both because they wanted to be paid for the free advertising Google was giving them and that previous attempts to force the issue, either through legal battles (Belgium, Germany, and elsewhere), new copyright laws (Germany, Spain), or antitrust complaints (Germany), generally backfired when Google responded by choosing to remove the snippets rather than pay for them.

Any future attempts (like EU's proposed snippet tax) are bound to fail. They are inevitably doomed, and anyone who doesn't see that coming is a fool. But to make matters worse, there was never any money to be got in the first place.

There's Literally No Money in a Google Snippet/Link Tax Google Taxes

Thomas Baekdal crunched some data earlier this week and he found that Google is making hardly anything from each search made by a user.

Baekdal made a couple goofs in his calculations (he thought Google would be paying for clicks rather than for impressions) but

First of all, Google is big, in fact, the current estimate is that Google is serving up between 1.5 to 2 trillion searches per year.

...

I have no idea. But let's estimate that 75% of Google's own ad revenue is from Google Search and the rest is for YouTube.

This means that Google Search has a revenue of $4.65 billion per month, of which about $700 million (not billion)is profit per month.

Now, we can take the $700 million in profit and divide that by the 125 billion searches to get the profit per search query.

The result is that Google makes... $0.0056 per search query.

...

But, "wait-a-minute", you say. That's because I'm talking about profits. Google should do a revenue split instead.

Okay, so if we do the same calculations based on revenue, we get this:

  • 125 billion searches
  • $4,65 billion in revenue

This gives us a 'per search' revenue of $0.037

Google is making under 4 cents per search, and turning a profit of around a half a cent per search.

Of course, that is an average across all of Google's search results, and it includes search terms and even whole verticals which are not monetized (Google News, for example). And that is also a global average and not based on EU revenues, so it is not 100% applicable. (And those calculations are based on a bunch of unsupported assumptions.)

Leaving those caveats aside, the point that matters is that news publishers want Google to pay for the use of their links and snippets. This means that Google would need to take that 3.7 cents and divide it between all of the relevant links returned with each click of the search button (after taking a cut for itself).

That money is not going to go nearly as far as the news publishers think.

Even a small blog such as this one will show up in Google's search results nearly 3 million times in a given month, and if the news publishers got their way then each of those 3 million impressions would (in principle) have to be paid for by Google.

I can't find any estimate of the number of impressions generated each month, but it is safe to say that the news publishers might as well be squeezing blood from a turnip.

Not only was the idea of a snippet tax never going to fly, there's just no money to be had in the first place.

Is anyone else suddenly reminded of that apocryphal definition of inanity?

image by reynermedia

About Nate Hoffelder (10939 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

2 Comments on There’s Literally No Money in a Google Snippet/Link Tax

  1. Gotta love those that want to have their cake and eat it too. I say let them go hungry, no cake now and none later.

    Google could give them ‘fair warning’ if they wanted to. A week of searches for anything in the EU that return “There were some EU matches found, but due to EU laws Google will not be showing those to you.”

  2. Reminds me of the suits where a huge amount of money (it seems) is split between a gigantic bunch of people in the class, with the lawyers taking a third or more of the settlement – but individuals getting a few dollars each.

    Really not worth it.

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